The Covid-19 pandemic has driven up spending and lowering incomes for smaller or single-site seniors’ residence service providers who lack the cash reserves of their larger peers. For some vendors, Payroll Protection Program (PPP) funds have served as a lifeline in times of turmoil, but long-term prospects remain unclear despite the aid.
The PPP has paid out hundreds of billions of dollars to businesses across the United States in the form of Small Business Administration (SBA) loans amounting to 250% of a company’s average monthly salary costs and capped at $ 10 million. The initial $ 350 billion cash pool ran out just days after the program launched in april, urging lawmakers to approve another $ 310 billion in financing.
Some of those dollars go to small businesses, including those in the retirement home sector. Chicago-based specialist investment bank Ziegler is aware of 106 nonprofit providers who have looked into the program, 93% of whom have applied for a loan through a P3. The average loan amount requested from these providers was approximately $ 2.4 million.
“This program has been extremely popular with almost everyone in our industry who qualifies,” Tommy Brewer, general manager of Ziegler’s senior finance practice, told Senior Housing News.
Vendors who had an in-house infrastructure to perform payroll were among the most likely to receive funds through the program, as working with third-party service providers sometimes made the documentation process difficult, Brewer added. And providers working with smaller banks were also more successful in securing SBA loans, at least among those tracked by Ziegler.
One of those providers was Chicago Methodist Senior Services (CMSS), a nonprofit senior housing provider with five small housing and senior care properties on the North Side of Chicago. The organization requested and received a $ 2.6 million PPP loan through Wintrust Financial to cover two and a half months of payroll. CMSS also received two grants from the US Department of Health and Human Services totaling $ 156,000 and $ 22,000 each, according to Bill Lowe, the organization’s president and CEO.
“We are lucky that there has been funds to come to the rescue,” Lowe told SHN.
CMSS has so far reported 16 confirmed cases of Covid-19 in two of its buildings. The organization has encountered difficulties in procuring personal protective equipment (PPE) and has chosen to enact temporary salary cuts ranging from 10% to 20% for some of its non-clinical employees who earn more than $ 50,000 per year.
While the road ahead appears to be bumpy, CMSS has been able to make ends meet for now thanks to this funding and the hard work of its frontline associates, Lowe said. The provider also received assistance from some of the organizations he bonded with over the years, like the United Methodist Association, which helped CMSS access an order for gowns that had not arrived.
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“Earlier in my career, I really didn’t appreciate the value of networking,” Lowe said. “But over the past 15 or 20 years, I’ve come to appreciate it on so many levels… especially now when you need a friend.”
Other housing and care organizations for the elderly may not be so fortunate. Lowe, who is on the board of directors for the Illinois chapter of LeadingAge, said he was aware of several other organizations the size of CMSS or smaller that were at risk of shutting down due to the pandemic.
“For some it’s an existential crisis,” Lowe told Senior Housing News. “I would say there are going to be some good and bad facility closures as this unfolds.”
Another company that received a much needed PPP loan is Elite Care, a senior housing provider with two residential home care campuses near Portland, Oregon. Like CMSS, Elite Care got a PPP loan to cover eight weeks payroll, though co-founders Bill Reed and Lydia Lundberg declined to share exactly how much.
“I think the loan will help us weather the storm because it will help us build up cash,” Reed told SHN. “I’m more concerned with a year on the road.”
The founders of Elite Care believe that the company has been fortunate not to have had a resident with Covid-19 yet and that its management company, Voorhies & Associates, has done a good job in maintaining the census despite the pandemic.
“Our bottom line has not been as affected as yet,” Lundberg told SHN.
Still, Reed is concerned that Covid-19 could wreak havoc among seniors who may later move into the community and damage the reputation of the retirement home industry as a whole.
“I think we’re going to have a black eye as an industry because of a few bad players,” Reed said. “And I hope this black eye doesn’t lead to a lack of demand in the future.”
